The issue of succession

Family agreement or trust? Two approaches to ensuring the continuity of family businesses

Only a minority of businesses plan adequately for generational succession, making careful planning essential to preserve the company’s economic and cultural heritage

by Luca Brambilla* and Nicola Canessa**

1 July 2026

4' min read

Translated by AI

Versione italiana

4' min read

Translated by AI

Versione italiana

Around a third (33.5%) of family businesses in Italy will undergo a generational handover between 2025 and 2034. This figure, reported by AIDAF (the Italian Association of Family Businesses), does not merely concern the succession of roles but implies a profound transformation of the ownership, financial and organisational structures of the country’s business sector.

The term ‘generational handover’, whilst widely used, risks being misleading: it conjures up a specific moment, almost like passing the baton. It would be more accurate, however, to speak of business continuity, implying the gradual nature of a process involving strategic decisions, training and governance. These require time and vision, because the change management process cannot be improvised.

The stakes are not merely economic. Ensuring business continuity means, in fact, preserving a heritage of values, culture and identity. When a historic brand is taken over by a multinational and wiped out, it is not just tangible wealth that is lost, but also decades – if not centuries – of entrepreneurial history. This represents a loss for the whole country.

Ownership and management: the two key assets of family businesses

In Italia, where over 80% of businesses are family-run, the issue of business continuity is also a cultural one. In some cases, the practice of automatically passing the business on to the eldest son persists, regardless of his skills. This practice now risks coming into conflict with the provisions of Article 2086 of the Civil Code, which requires organisational structures appropriate to the nature and size of the business.

To truly address business continuity, it is necessary to draw a clear distinction between ownership and management: whilst in a family-run business the principle of equality amongst heirs must prevail – not least to comply with the rules on the reserved share – the management of the business must be guided by criteria of merit and competence.

The family agreement: immediate certainty, structural rigidity

There are various legal instruments available to ensure business continuity. The family agreement is one of them.

Introduced into the Italian Civil Code in 2006, it allows an entrepreneur to transfer their business (or shareholdings) during their lifetime to one or more descendants, with the aim of avoiding inheritance disputes. Its main strength lies in stability: by involving all statutory heirs by operation of law, it makes it possible to ‘settle’ the issue of future inheritance disputes (at least in respect of the allocations made through the family agreement). However, it requires an immediate choice of successor, even when it is not yet clear who is best suited to take over the reins. It also poses a practical problem: the child designated as the successor is required to compensate the other heirs financially using assets of their own, a condition that is often difficult to meet if the heir is young or lacks their own resources.

In practice, a family agreement works well in straightforward situations – for example, where there is a single heir – but becomes more complex to implement when the family is larger and the future remains uncertain.

Trusts: flexibility and time in generational succession

One of the most commonly used instruments in generational succession is the domestic trust, which was introduced into Italian law following the ratification of the 1985 Hague Convention. The mechanism works as follows: the business owner transfers the assets to a trustee, who manages them in the beneficiaries’ interests in accordance with rules laid down in advance.

It is not a one-size-fits-all solution, but compared to a family agreement, it offers one advantage: the time factor. The trust allows the transfer of shareholdings to be deferred until a more appropriate time, whilst ensuring the orderly management of the business in the meantime. Rather than setting decisions in stone, it creates a space in which they can mature – a ‘clearing house’ – thereby facilitating more informed planning.

Another key feature of this type of management is the reduction of conflict amongst heirs, which is often critical to business continuity. The separation of ownership, management and family dynamics, together with clear rules, helps to stabilise the handover.

Furthermore, from a tax perspective, a trust offers flexibility regarding the timing of taxation – upon acquisition or disposal – and provides for tax exemptions on the transfer of controlling shareholdings to descendants. Finally, from a management perspective, it can be used to separate strategic assets, such as the brand, from the operating company, ensuring their long-term continuity and generating income streams through licensing.

Two instruments, two philosophies

Family agreements and trusts are not mutually exclusive alternatives, but they are based on different principles: a family agreement prioritises immediate certainty but requires swift and definitive decisions; a trust offers flexibility and a gradual approach, allowing the most suitable solution to be developed over time.

According to Deloitte, only a minority of family businesses take succession planning seriously (just 9 per cent): the challenge, therefore, is to focus on the approach that best aligns with the company’s history, structure and prospects.

Because business continuity cannot be improvised: it has to be planned.

*Director of the Academy of Strategic Communication

**Partner at CBA Law and Tax Firm